Most taxpayers have a choice of either taking a standard deduction
or itemizing their deductions. If you have a choice, you can use the method that
gives you the lower tax.

The standard deduction is a dollar amount that reduces the amount
of income on which you are taxed. It is a benefit that eliminates the need for
many taxpayers to itemize actual deductions, such as medical expenses,
charitable contributions, and taxes, on Schedule A of Form 1040. The standard
deduction is higher for taxpayers who:

Are 65 or older,

Are blind,

Have a net disaster loss in 2010 because of a disaster that
occurred before 2010 and was declared a federal disaster after 2007, or

Paid state or local sales or excise taxes (or certain other
taxes or fees in a state without a sales tax) in 2010 on the purchase of a new
motor vehicle after February 16, 2009, and before 2010.

You benefit from the standard deduction if your standard
deduction is more than the total of your allowable itemized deductions.

Your standard deduction is zero and you should itemize any deductions
you have if:

Your filing status is married filing separately, and your
spouse itemizes deductions on his or her return,

You are filing a tax return for a short tax year because of
a change in your annual accounting period, or

You are a nonresident or dual-status alien during the year.
You are considered a dual-status alien if you were both a nonresident and
resident alien during the year.If you are a nonresident alien who is married to a U.S. citizen
or resident alien at the end of the year, you can choose to be treated as a U.S.
resident. (See Publication 519.) If you make this choice, you can take the
standard deduction.

If an exemption for you can be claimed on another person's
return (such as your parents' return), your standard deduction may be limited.
See
Standard Deduction for Dependents, later.

The standard deduction amount depends on your filing status,
whether you are 65 or older or blind, whether an exemption can be claimed for
you by another taxpayer, whether you have a net disaster loss from a federally
declared disaster, and whether you paid state or local sales or excise tax (or
certain other taxes or fees in a state without a sales tax) in 2010 on the
purchase of a new motor vehicle after February 16, 2009, and before 2010.
Generally, the standard deduction amounts are adjusted each year for inflation.
Use
Worksheet 3 to figure your standard deduction amount.

The amount of the standard deduction for a decedent's final tax
return is the same as it would have been had the decedent continued to live.
However, if the decedent was not 65 or older at the time of death, the higher
standard deduction for age cannot be claimed.

If you are partly blind, you must get a certified statement from
an eye doctor or registered optometrist that:

You cannot see better than 20/200 in the better eye with glasses
or contact lenses, or

Your field of vision is not more than 20 degrees.

If your eye condition will never improve beyond these limits,
the statement should include this fact. You must keep the statement in your
records.

If your vision can be corrected beyond these limits only by contact
lenses that you can wear only briefly because of pain, infection, or ulcers, you
can take the higher standard deduction for blindness if you otherwise qualify.

Your standard deduction is increased by any state or local sales
or excise taxes you paid in 2010 on the purchase of a new vehicle after February
16, 2009, and before 2010.

If you bought the vehicle in 2010, you cannot increase your standard
deduction by any taxes you paid on the purchase.

The amount is limited to tax on the first $49,500 of the purchase price. The
taxes must be state or local sales or excise taxes that would be deductible on
Form 1040 (Schedule A) if you were itemizing your deductions. In states without
a sales tax, certain other taxes or fees qualify if they are assessed on the
purchase of the vehicle and are based on the vehicle's sales price or as a per
unit fee. Taxes deductible in arriving at adjusted gross income, such as taxes
on a vehicle used in your business, cannot be used to increase your standard
deduction.

If you are increasing your standard deduction by the amount of
these state or local sales or excise taxes, complete Schedule L (Form 1040A or
1040) and attach it to your return.

Your standard deduction is increased by any net disaster loss
you had in 2010 because of a disaster that occurred before 2010 and was declared
a federal disaster after 2007. This amount is on Form 4684, line 17.

If you are increasing your standard deduction by the amount of
your net disaster loss, complete Schedule L (Form 1040A or 1040) and attach it
your return.

Larry, 46, and Donna, 33, are filing a joint return for 2010.
Neither is blind, and neither can be claimed as a dependent. They did not pay
sales or excise taxes on the purchase of a new motor vehicle or have a net
disaster loss. They decide not to itemize their deductions. Because they are
married filing jointly, they enter $11,400 on line 1 of
Worksheet 3. They check the "No" box on line 2, so they also enter $11,400
on lines 4 and 7. Their standard deduction is $11,400.

The facts are the same as in
Example 1, except that Larry is blind at the end of 2010, so he and Donna
enter $1,100 on line 5 of
Worksheet 3. They then enter $12,500 ($11,400 + $1,100) on line 7, so their
standard deduction is $12,500.

Bill and Lisa are filing a joint return for 2010. Both are over
age 65. Neither is blind, and neither can be claimed as a dependent. They did
not pay sales or excise taxes on the purchase of a new motor vehicle or have a
net disaster loss. They do not itemize deductions, so they use
Worksheet 3. Because they are married filing jointly, they enter $11,400
on line 1. They check the "No" box on line 2, so they also enter $11,400 on line
4. Because they are both over age 65, they enter $2,200 ($1,100 × 2) on
line 5. They enter $13,600 ($11,400 + $2,200) on line 7, so their standard
deduction is $13,600.

The facts are the same as in
Example 3
except that Bill and Lisa had an $8,000 net disaster loss from a federally
declared disaster that occurred in 2009. That is the amount on line 17 of their
Form 4684. They enter $8,000 on line 6 of
Worksheet 3. On line 7 of the worksheet, they enter $21,600 ($11,400 +
$2,200 + $8,000), which is their standard deduction. Because line 6 is greater
than zero, they must complete Schedule L (Form 1040A or 1040) and attach it to
their return.

The standard deduction for an individual for whom an exemption
can be claimed on another person's tax return is generally limited to the
greater of:

$950, or

The individual's earned income for the year plus $300 (but
not more than the regular standard deduction amount, generally $5,700).

However, if the individual is 65 or older or blind, paid state
or local sales or excise taxes on the purchase of a new motor vehicle, or had a
net disaster loss from a federally declared disaster, the standard deduction may
be higher.

If an exemption for you (or your spouse if you are married filing
jointly) can be claimed on someone else's return, use Worksheet 3 to determine
your standard deduction.

Earned income is salaries, wages, tips, professional fees, and
other amounts received as pay for work you actually perform.

For purposes of the standard deduction, earned income also includes any part of
a scholarship or fellowship grant that you must include in your gross income.
See chapter 1 of Publication 970 for more information on what qualifies as a
scholarship or fellowship grant.

Michael is single. His parents claim an exemption for him on
their 2010 tax return. He has interest income of $780 and wages of $150. He did
not pay sales or excise taxes on the purchase of a new motor vehicle or have a
net disaster loss. He has no itemized deductions. Michael uses
Worksheet 3
to find his standard deduction. Because he is single, he enters $5,700 on line
1. He checks the "Yes" box on line 2, enters $950 on line 3, and also enters
$950 (the smaller of line 1 and line 3) on line 4. He leaves lines 5 and 6 blank
and enters $950 on line 7. His standard deduction is $950.

Joe, a 22-year-old full-time college student, is claimed on his
parents' 2010 tax return. Joe is married and files a separate return. His wife
does not itemize deductions on her separate return. Joe has $1,500 in interest
income and wages of $3,800. He did not pay sales or excise taxes on the purchase
of a new motor vehicle or have a net disaster loss. He has no itemized
deductions. Joe finds his standard deduction by using
Worksheet 3. Because he is married filing a separate return, he enters
$5,700 on line 1. He checks the "Yes" box on line 2, enters $4,100 ($3,800 +
$300) on line 3, and also enters $4,100 (the smaller of line 1 and line 3) on
line 4. He leaves lines 5 and 6 blank and enters $4,100 on line 7. His standard
deduction is $4,100.

Amy, who is single, is claimed on her parents' 2010 return. She
is 18 years old and blind. She has interest income of $1,300 and wages of
$2,900. She did not pay sales or excise taxes on the purchase of a new motor
vehicle or have a net disaster loss. She has no itemized deductions. Amy finds
her standard deduction by using
Worksheet 3. Because she is single, she enters $5,700 on line 1. She checks
the "Yes" box on line 2, enters $3,200 ($2,900 + $300) on line 3, and also
enters $3,200 (the smaller of line 1 and line 3) on line 4. Because she is
blind, she enters $1,400 on line 5. She enters $4,600 ($3,200 + $1,400) on line
7. Her standard deduction is $4,600.

Ed is single. His parents claim an exemption for him on their
2010 tax return. He has wages of $6,841, interest income of $504, and a business
loss of $3,115. He has no itemized deductions. Ed uses
Worksheet 3
to figure his standard deduction. Because he is single, he enters $5,700 on line
1. He checks the "Yes" box on line 2, and enters $4,026 ($6,841+ $300 - $3,115)
on line 3, and also enters $4,026 (the smaller of line 1 and line 3) on line 4.
He leaves lines 5 and 6 blank and enters $4,026 on line 7. His standard
deduction is $4,026.

You should itemize deductions if your total deductions are more
than the standard deduction amount. Also, you should itemize if you do not
qualify for the standard deduction, as discussed earlier under
Persons not eligible for the standard deduction.

You should first figure your itemized deductions and compare
that amount to your standard deduction to make sure you are using the method
that gives you the greater benefit.

Even if your itemized deductions are less than the amount of
your standard deduction, you can elect to itemize deductions on your federal
return rather than take the standard deduction. You may want to do this, for
example, if the tax benefit of being able to itemize your deductions on your
state tax return is greater than the tax benefit you lose on your federal return
by not taking the standard deduction. To make this election, you must check the
box on line 30 of Schedule A.

If you do not itemize your deductions and later find that you
should have itemized — or if you itemize your deductions and later find
you should not have — you can change your return by filing Form 1040X.

You can change methods of taking deductions only if you and your
spouse both make the same changes. Both of you must file a consent to assessment
for any additional tax either one may owe as a result of the change.

You and your spouse can use the method that gives you the lower total tax, even
though one of you may pay more tax than you would have paid by using the other
method. You both must use the same method of claiming deductions. If one
itemizes deductions, the other should itemize because he or she will not qualify
for the standard deduction. See
Persons not eligible for the standard deduction, earlier.

Caution.
If your filing status is married filing separately and your spouse itemizes
deductions on his or her return, or if you are a dual-status alien, do not
complete this worksheet. You cannot take the standard deduction even if you were
born before January 2, 1946, are blind, had a net disaster loss, or paid state
or local sales or excise tax on the purchase of a new motor vehicle.

If you paid state or local sales or excise tax
in 2010 on the purchase of a new motor vehicle after February 16, 2009, and
before 2010, you cannot use this worksheet to figure your standard deduction.
You must use Schedule L (Form 1040A or 1040) and attach it to your return.

If you are filing Form 1040EZ, do not use this
worksheet. Instead, see line 5 of Form 1040EZ.

1.

Enter the amount shown below for your filing status.

Single or married filing separately — $5,700

Married filing jointly or Qualifying widow(er) —
$11,400

Head of household — $8,400

1.

2.

Can you (or your spouse if filing jointly) be claimed
as a dependent on someone else's return?No.
Skip line 3; enter the amount from line 1 on line 4, and go to line 5.
Yes. Go to line 3.

3.

Is your
earned income* more than $650?

Yes. Add $300 to your earned income. Enter the total

3.

No. Enter $950

4.

Enter the
smaller of line 1 or line 3

4.

5.

If born before January 2, 1946, or blind, multiply the
number on Form 1040, line 39a (or Form 1040A, line 23a**) by $1,100 ($1,400 if
single or head of household). Otherwise, enter -0-

5.

6.

Enter any net disaster loss from Form 4684, line 17**

6.

7.

Add lines 4, 5, and 6.
This is your standard deduction for 2010.

7.

*Earned incomeincludes wages, salaries, tips, professional fees, and
other compensation received for personal services you performed. It also
includes any amount received as a scholarship that you must include in your
income. Generally, your earned income is the total of the amount(s) you reported
on Form 1040, lines 7, 12, and 18, minus the amount, if any, on line 27 (or the
amount you reported on Form 1040A, line 7).

**If the amount on line 6 of this worksheet is more
than zero, you must complete Schedule L (Form 1040A or 1040) and attach it to
your return. Also, if the amount on line 6 of this worksheet is more than zero,
you cannot file Form 1040A; you must file Form 1040.